NDP transportation critic Gilles Bisson says auto insurance companies have profited by billions from legislation that reduced payouts for personal injuries. He says those savings were never passed on to the consumer.

"That's why in the budget we said we need 15 per cent. We need it now — it has to be done this year," he said ahead of the announcement.

Most Ontario drivers say their insurance costs are too high, with rates rising rapidly over the past few years even for drivers with 25 years accident free.

Randy Carroll of the Insurance Brokers Association of Ontario welcomes a rate reduction, but says the government must first crack down on insurance fraud.

Fraud is costing the industry $1.5 billion annually, he said. Among the scams are dishonest medical clinics that use a patient's information to file false claims and tow truck drivers who work with repair shops to falsify repair bills.

"If we get the rates down before the fraud is out of the system it will just put undue pressure on insurers and will end up putting undue pressure on consumers," he told CBC News.

Industry organization Insurance Bureau of Canada was critical of the province for expecting insurers to lower premiums while taking no steps to lower costs.

"While the government has approved insurance rate reductions they still haven't outlined how they will address some key cost reforms we need to see implemented," IBC vice-president Ralph Palumbo said. "Reducing costs is the only way to reduce premiums."

He claimed steps the government had taken in 2010 to combat fraud, including licensing health care clinics, are not yet producing savings. Palumbo said the IBC hopes to work with the government to bring costs down.

Auto insurance rates are determined by individual insurers using a combination of factors including driving experience, driving record, use and location of the vehicle, the type of vehicle driven, and amount of coverage and deductibles selected.

But Ontario’s Superintendent of Financial Services reviews rates proposed by every company and the Financial Services Commission of Ontario regulates auto insurance to ensure protection for drivers.

The FSCO will likely enforce Ontario’s mandated rate reductions. Ontario drivers won’t see the new rates kick in until they renew their policies.